Tips for Avoiding Bank Overdraft Charges

Having overdraft protection at the bank is a very wise decision, but there are charges if you still overdraft. The best tips for avoiding bank overdraft charges are to budget accordingly so that you can pay your bills promptly, set up electronic bill payments where applicable, and keep a spending journal of some sort.

Overdrafts are a set amount of dollars that a bank will allow you to default on your account. For example, if you have a bank overdraft of five hundred dollars, you are able to theoretically let your account dip to minus five hundred. This can be helpful for people that live from payday to payday, or those that have pay schedules that are irregular, such as a freelance writer.

With an operational budget, you can have better control over your financial situation. Those persons that employ a budget tend to not worry about bank overdraft charges. With a budget in place, your monetary issues are kept intact. A budget helps you to stay organized and to not make simple mistakes that lead you to bank overdraft charges, and poor credit.

Budgeting requires you to know all of your income and expenditures, and then lets you establish a disciplined approach to spending and saving. With a functional budget, it is much less likely that you will make large mistakes that can lead to the bank levying overdraft charges on your account.

A budget lets you pay bills promptly, since you will have planned when each bill is due and coordinated it with a payday. Having your bills come out at a certain time of the month is also rather beneficial.

Setting up electronic bill payments is a fantastic method of avoiding bank overdraft charges. With electronic bill payments, you can schedule all of your monthly bills to be paid coinciding with your payday schedule. Once the money is deposited into your account from your employer, your bill payments should begin to occur without your having to pay one moment’s attention.

This can help you significantly in that you will not have the opportunity to spend the money on something frivolous, because it will already be taken away by the large conglomerations that regularly pilfer your account. This also makes budgeting much more simple.

A spending journal, or spreadsheet, can help you to visualize your spending habits, and show it to you in raw data form. Most people tend to be rather oblivious to their financial situation because they do not actively take note of it. Along the same principles that a Casino employs by using chips in lieu of actual cash, it is harder to determine true worth. With your spending habits, if you do not keep an active eye on them, they can quickly become rather burdensome, eventually leading to bank overdraft charges.

Spending and saving your money wisely comes in due time, and this financial responsibility and maturity will help you to realize the importance of your money as it pertains to your day to day life.

Therefore, if you set up a budget, keep track of it, and allow electronic bill payments to assist you, the odds of bank overdraft charges are vastly reduced.